1 suppose we are planning a 100 mw wind farm with a 1 year p 50 capaci

Question

1. Suppose we are planning a 100 MW wind farm with a 1-year p-50 capacity factor of 44%
and a 1-year p-99 capacity factor of 36%. The total cost to build the plant is $1,400/kW, and
all power will be sold on a long-term power purchase agreement for $35/MWh. The plant has
fixed operating costs of $40/kW-yr. A lender is willing to offer a 25-year loan at an interest
rate of 4.5%.
(a) What is the wind farm's Cash Flow Available for Debt Service (CFADS) if the lender
sizes the debt based on a debt service coverage ratio of 1.30x at the p-50 level?
(b) What would the CFADS be if the lender instead used a DSCR of 1.00x at the p-99
level?
(c) Suppose the lender uses the smaller of the annual payments implied by parts (a) and
(b). What is the total debt capacity (i.e., maximum loan size) for the project?
(d) Assuming the project developers use the maximum amount of debt on offer, what
percent of the project will be funded by the equity investors?